Correlation Between Yokohama Rubber and FedEx Corp

Can any of the company-specific risk be diversified away by investing in both Yokohama Rubber and FedEx Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Yokohama Rubber and FedEx Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Yokohama Rubber and FedEx Corp, you can compare the effects of market volatilities on Yokohama Rubber and FedEx Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Yokohama Rubber with a short position of FedEx Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yokohama Rubber and FedEx Corp.

Diversification Opportunities for Yokohama Rubber and FedEx Corp

0.11

Correlation Coefficient

Yokohama Rubber  FedEx Corp

Average diversification

The 3 months correlation between Yokohama and FedEx is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding The Yokohama Rubber and FedEx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx Corp and Yokohama Rubber is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Yokohama Rubber are associated (or correlated) with FedEx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx Corp has no effect on the direction of Yokohama Rubber i.e., Yokohama Rubber and FedEx Corp go up and down completely randomly.

Pair Corralation between Yokohama Rubber and FedEx Corp

Assuming the 90 days trading horizon The Yokohama Rubber is expected to generate about the same return on investment as FedEx Corp. However, Yokohama Rubber is 1.05 times more volatile than FedEx Corp. It trades about 0.04 of its potential returns per unit of risk. FedEx Corp is currently producing about 0.05 per unit of risk. If you would invest  18,742  in FedEx Corp on October 25, 2024 and sell it today you would earn a total of  7,828  from holding FedEx Corp or generate 41.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

The Yokohama Rubber  vs.  FedEx Corp

Yokohama Rubber

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Yokohama Rubber are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Yokohama Rubber may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FedEx Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FedEx Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Yokohama Rubber and FedEx Corp

The main advantage of trading using opposite Yokohama Rubber and FedEx Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yokohama Rubber position performs unexpectedly, FedEx Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FedEx Corp will offset losses from the drop in FedEx Corp's long position.

The idea behind The Yokohama Rubber and FedEx Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.